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geodan

07/29/23 1:02 PM

Post #1

I am getting very positive on ROK, ROKRF. Hard to see anything bad. Down .55 to .31 Cad in about 8 months but they may be worth more now than then. Yet 44% lower cost now. Oil is higher than then and headed down then not up now.

Debt? Since March 2022, the Company has retired more than $55 million of debt while increasing its base production from 3,000 boepd to 3,750 boepd (>25%). The Company has retained a $22.5 million revolving credit facility, with current net debt estimated at $10 million.

Hedging Update: As a result of the early Term Loan repayment, the Company made the strategic decision to unwind certain commodity swap hedges placed in 2023, 2024 and 2025. BTW they made a bunch on hedges they put on in 90s. I think oil is now going to $100ish. They played it smart first time, think they are also this time.

Management for a $66 million Cad company is superb and proven. They have built and sold at a profit 3-4 oil companies in past. The COO is young.

How did they pay off all that debt? "Notably, since the FCL acquisition in March 2022, the Company has disposed of approximately $74 million in non-core assets representing ~31% of production and ~127% of the purchase price, after closing adjustments." https://rokresources.ca/assets/rok-resources-inc-investor-presentation-july-2023.pdf

BTW it was selling a tiny percent of Weyburn Unit (all that they had) for a lot. So they make a 27% profit in 1 year yet kept 69% of what they bot production wise, Wow! So the debt is almost gone now and they have 3.750 bopd production. Their usd mkt cap is $50 million. They sold $15 million Cad more than their entire current mkt cap and yet still have 69% of what they bot, just selling 31%. Seems they are good dealmakers.

2023E Net Debt/EBITDA is 0.2X, 2023E EV/EBITDA 2.4 and they are free cash flowing.

Did I get any of this wrong?

ROK Resources Inc (ROKRF)

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Created	07/29/23	Type	Free
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A growth-oriented oil & gas company well-positioned to capitalize on the current commodity cycle

Management brings a solid track record of execution and value creation through the development, from infancy to the successful divestitures, of four successive companies generating shareholder returns of 3x
https://rokresources.ca/assets/rok-resources-inc-investor-presentation-july-2023.pdf This is formatted better, read it.

Experienced Leadership Team Co-founder of ROK Resources Inc., and former VP Engineering of Villanova 4 Oil Corp. Mr. Wright has over 14 years of experience in Williston Basin oil exploration and production, specifically SE Sask. conventional and unconventional oil plays. He holds an BSc in Petroleum Systems Engineering and is a registered Professional Engineer with APEGS (Sask.) and APEGA (Alberta). Co-founder of ROK Resources Inc., and former VP Land with Villanova 4 Oil Corp.

Mr. Lukomski has over 14 years of experience in leading land related initiatives. Prior to joining the Villanova Group, Jared was employed by Conexus Credit Union from 2000 to 2007 where he managed a book of business in his role as a Commercial Account Manager. Co-founder of ROK Resources Inc., former President and CEO of Villanova 4 Oil Corp., Villanova Oil Corp. & Villanova Resources Inc.

Mr. Taylor is a geoscientist with over 30 years of experience in oil & gas exploration and development. Since graduating with a BSc. in Geophysics in 1988, he has worked the Williston Basin, Foothills, deep Devonian and heavy oil exploration within Canada. Bryden Wright | P.Eng.

Mr. Chapman began his professional career with KPMG LLP after graduating from Mount Royal University with a Bachelors of Business Administration – Accounting degree, and is a Chartered Professional Accountant of Canada (Alberta). Lynn Chapman | CA Chief Financial Officer

Opportunistic Use of Leverage ROK applies conservative leverage strategies to selectively fund accretive opportunities while minimizing risk

Announced new debt facility consisting of a $52.5mm term loan and $22.5mm revolving credit facility to fund the SE Sask. acquisition and repay higher interest ACES debt – total reduction in interest costs of ~35% Proceeds from divestiture eliminates 85% of outstanding term loan, resulting in estimated future interest savings of ~$5.8mm Balance of senior term debt repaid in May 2023.